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Old 01-03-2005, 09:28 PM   #7 (permalink)
sunsally
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4 units now - 2 are standups - other two are basically basebeds, although he is probably using the 32/3 as his "upgrade" from the 28/1. Is there room to put in additional rooms? Are the current rooms big enough to accommodate bigger units? It is VERY hard to make a 4 bed salon "work" in terms of a real money maker - just can't physically do enough tans!

Of course, if you say yes, I'm going to say that with 150amps and 3 tons AC, you are already close to max anyway! So even with more squarefootage available, would have to upgrade Elec and AC (which is pricey).

But that said - I don't like the "mix" at all! Base bed of only 28 lamps is not "competitive" in most markets. But then putting in facial gives them less reason to "upgrade" to the nicer beds (never put in facials on base beds!). Level 2 is "ok". 2 stand-ups is probably 2 too many in most markets! The huge difference in hours bears that out in this salon. At a minimum, would trade in one of them for a "big bed" of at least 40+ bulbs with facials (e.g. - just so you can go look at something on the web, see www.sunergoline.com for the Ergoline 400 or 500 -- beds that retail for about $20K).

Rent is cheap, although again, only 4 units. Payroll would be the same whether you had 4 units or 14 - so again, the 4 units makes this much less cost effective.

Realize that Feb - May are "the season", when you typically make 75% of your money for the year! (or Jan - June for sure). March and/or April are typically the BEST month - generally about 15% of the year's income. So the "drop off" you see later in the year is to be expected - and you will do the same.

Lotion - if it costs $50 "retail", they likely paid $15 for it. So make sure to look very carefully when you assess the true "value" of the "moderate" amount of lotion you would get with the inventory. Probably a few hundred dollars at most.

Also - check to see when the beds were last relamped (and see a bill/invoice to ensure it was really done) - my guess is that they are 'due' to be done again. You are looking about probably $800-1000 each for the standups and $350-400 each for the beds. This is a twice/year expense you should figure in your "overhead" calculations. And plenty for advertising as sizzletan points out!

$10,000 seems fair for gettng the build-out, equipment, inventory - he's just cutting his losses it seems. My concern is that the POTENTIAL for this salon really IS only to "break even" or a bit more because of it's limited size. Do his numbers include anything for payroll, or were they working it themselves for "free"?

I worry about your statement saying "I know nothing about the tanning industry" and feeling like you have to make a "fast" decision. $10K isn't much in the whole scheme of things, but I think you may just be buying yourself a "job" until you can move or expand the operation and add some additional equipment.

Last questions - if you are assuming his lease, how long are you locked in? Is there room within the strip (preferably on a side of you) to expand?

Feel free to PM me with more specific questions/details!!
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